By Oliver Holmes
BEIRUT (Reuters) - Europe's decision to blacklist Hezbollah's "military wing" was triggered by the Lebanese movement's growing role in Syria, but the partial ban may have little practical impact due to fears of destabilizing Lebanon and the wider Middle East.
With a military force that rivals the Lebanese army, Shi'ite Hezbollah has used a mixture of political power and force since the end of Lebanon's 15-year civil war in 1990 to pursue its goals -- officially defending the country from neighbor Israel.
The listing, formally due to an alleged Hezbollah attack on Israelis in Bulgaria, was spurred on by concern over the Iranian-backed group's intervention in Syria, where it has helped President Bashar Al-Assad combat the two-year-old revolt against his rule.
It seeks to distinguish Hezbollah's military activities from its political ones, which are not affected.
The distinction was made to try to draw the movement away from violence and avoid retaliation, but even those involved in Monday's listing admit it could be tricky.
"We have to distinguish as best we can," British Foreign Secretary William Hague told reporters after the decision.
Hezbollah's deputy leader said last year his group did not divide itself into military and political wings, saying all elements were "in the service of the resistance" against Israel.
With Hezbollah figures in both the Lebanese caretaker cabinet and parliament, a ban on the entire group could jeopardize diplomatic relations with the Lebanese state and destabilize Lebanon if Hezbollah were to react.
European peacekeeping forces work on the south Lebanese border with Israel, Hezbollah's stronghold, and EU countries also feared a comprehensive ban would leave soldiers exposed to revenge attacks.
"If the EU can explain to me where the military wing of Hezbollah ends and the political wing starts, they should be given a Nobel prize for physics," Beirut-based political commentator Rami Khouri said, adding that the move was "totally insignificant" in Lebanon.
Hezbollah said it rejected the EU's "aggressive and unjust decision which is not based on any proof or evidence" but has not promised any concrete retaliation.
Iranian Foreign Minister Ali Akbar Salehi, whose government is Hezbollah's main backer, said the ban was toothless:
"The foreign ministers of the European Union are of the opinion this will affect regional developments but because of the lack of correct analysis of these crises, have adopted the wrong approach."
James Fallon, a Middle East analyst at London-based consultancy Control Risks, said because the EU had made a "distinction where no formal distinction exists" between the military and political wings of the group, the impact of the ban, which includes an asset freeze, will depend on how it is enforced.
"Presumably some of the Hezbollah funding from the EU goes to charity and political operations. On other occasions there might be provable incidents when it goes to military activities."
The EU decision followed a bus bombing in Bulgaria that killed five Israelis and their driver a year ago and a four-year jail sentence handed by a Cypriot court in March to a Hezbollah member accused of plotting to attack Israeli interests there.
Although the Bulgaria bombing was the main reason given by most EU governments that backed the ban, some countries, such as France, said openly that Hezbollah's role in Syria was a factor in throwing their support behind the measure.
Several U.S. officials also said on Monday that Syria, where Hezbollah has thousands of fighters, was the key factor.
One diplomat from an EU country that backed the listing said before the decision that along with attacks in Europe, Hezbollah's action to "do all it can to help the victory of Bashar al-Assad...has been a triggering element" for the ban.
Fallon said the EU ban has come now - and not any time since the U.S. blacklisted Hezbollah in 1995 - because despite Hezbollah's "growing political role since the end of the Lebanese civil war, a shift which the EU has sought to encourage, it is still very much a military organization," which is exemplified by its role in Syria.
BLOW TO HEZBOLLAH'S IMAGE
Amal Saad Ghorayeb, who wrote a book on Hezbollah, said the ban deals a "blow to Hezbollah's popular image" even though it was symbolic. "It's designed to make people wary of supporting Hezbollah," she said.
Set up with the aim of fighting Israel after its invasion of Lebanon three decades ago, Hezbollah was the only civil war-era militia to keep hold of a sizeable arsenal, arguing its arms present a bulwark against Israeli attack.
It has dominated politics in Beirut in recent years and supporters of the listing said it would give the movement pause.
Matthew Levitt, a senior fellow at The Washington Institute, said it would allow EU governments to initiate preemptive investigations into activities that can be tied in any way to Hezbollah's military wing, making "Europe a far less attractive place for Hezbollah operatives".
The designation "makes clear to Hezbollah that international terrorism, organized crime, and militia operations will endanger its legitimacy as a political and social actor," Levitt said in article in response to the EU decision.
(Additional reporting by Justyna Pawlak and Adrian Croft in Brussels, Marcus George in Dubai and Stephen Kalin in Beirut; editing by Philippa Fletcher)